Small-scale industrial exemption turns on notification conditions and real business independence, not trade mark use alone.

Eligibility for sales tax exemption under the small-scale industrial unit notification depended on the unit meeting the notification's stated conditions, including investment limits, registration and commencement after the cut-off date. The Court held that eligibility could not be denied on grounds not found in the notification, and that borrowing from private sources was irrelevant because it was not prohibited. It further held that a unit does not become an expansion or branch of another concern merely because it manufactures goods under that concern's trade mark or under commercial arrangements. In the absence of real interdependence, unity of control, or financial and managerial integration, the petitioner's unit remained an independent small-scale unit entitled to the eligibility certificate and exemption.

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Issues: (i) whether the petitioner was entitled to an eligibility certificate under the exemption notification for a newly set up small-scale industrial unit; (ii) whether the petitioner's unit could be treated as an expansion or branch of the established concern merely because it manufactured fans under the trade mark of another company and sold them under commercial arrangements.

Issue (i): whether the petitioner was entitled to an eligibility certificate under the exemption notification for a newly set up small-scale industrial unit.

Analysis: The exemption under section 4AA of the West Bengal Sales Tax Act, 1954, as implemented by Notification No. 1809-F.T. dated 1st April, 1976 and later amended on 1st April, 1980, depended on the notified unit satisfying the stated conditions. The petitioner's investment in plant and machinery was within the prescribed limit, the unit was registered as a small-scale industrial unit, and production had commenced after the relevant cut-off date. The additional requirement introduced in 1980 was the possession of an eligibility certificate, but that certificate could not be refused on grounds not found in the notification. The authority's reliance on borrowing from private sources was irrelevant because the notification did not prohibit such borrowing.

Conclusion: The petitioner satisfied the statutory and notification conditions and was entitled to the eligibility certificate.

Issue (ii): whether the petitioner's unit could be treated as an expansion or branch of the established concern merely because it manufactured fans under the trade mark of another company and sold them under commercial arrangements.

Analysis: The Court applied the settled test that separate businesses are not to be treated as one unless there is real interconnection, interdependence, unity of control, or financial and managerial integration. Mere use of another concern's trade mark, or manufacture according to commercial specifications, does not by itself show that the products are manufactured on behalf of the trade mark owner. The facts showed that the petitioner owned and operated its own plant and machinery, carried on manufacture in its own unit, and made sales on commercial terms. The arrangement with the other company was treated as a genuine business arrangement, not as evidence that the petitioner was a dummy, branch, or extension concern.

Conclusion: The petitioner's unit was not an expansion or branch of the other concern, and the refusal of exemption on that ground was unsustainable.

Final Conclusion: The impugned rejection of the eligibility certificate and the proposed assessment notice could not stand, and the petitioner remained entitled to the sales tax exemption under the notification.

Ratio Decidendi: For exemption under a small-scale industrial unit notification, refusal cannot rest on considerations outside the notification, and mere use of another entity's trade mark or a principal-to-principal commercial arrangement does not make the unit an extension of that entity in the absence of real interdependence or control.

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